Gold prices are expected to trade lower today

Source: Angel Commodities Pvt Ltd

Bullion

Gold

Spot gold prices declined by 0.74 percent on Wednesday to close at $1060.7 per ounce as the combination of a firm dollar and weak oil prices left the metal on track for its third consecutive annual loss.

Bullion has lost 10 percent of its value this year, largely on concerns that higher U.S. interest rates would hurt demand for the non-yielding asset. Investor interest in gold remained absent, with assets of SPDR Gold Trust GLD, the top gold-backed exchange-traded fund, still near a seven-year low.

On the MCX, gold prices declined by 0.59 percent to close at Rs.24982 per kg.

Silver

On Wednesday, spot silver prices declined by 0.6 percent to close at $13.9 per ounce. The fall in silver prices is in line with decline in gold prices and stronger dollar index which rose by 0.2 percent on yesterday’s trading session.

On the MCX, silver prices declined by 0.5 percent to close at Rs.33390 per kg.

Outlook

Following the U.S. Federal Reserve’s move to raise interest rates for the first time in nearly a decade this month and indications that the central bank would resort to gradual increases in 2016, the outlook for gold does not look bullish.

Profit booking at higher levels, range bound trade, thin liquidity on account of holidays will exert downside pressure on the yellow metal. Besides, low investment demand will also act as a negative factor.

Energy

Crude Oil

WTI oil prices declined by 3.4 percent on Wednesday to close at $36.6 per barrel with Brent sliding toward 11-year lows, after an unusual build in U.S. stockpiles and signs Saudi Arabia will keep adding to the global oil glut.

Crude inventories in the United States, the world’s largest petroleum producer, rose 2.6 million barrels last week, the U.S. Energy Information Administration said. China’s energy consumption in 2015 grew at its lowest since 1998, the official news agency Xinhua said, adding to the market’s downside.

On the MCX, oil prices declined by around 3 percent to close at Rs.2442 per barrel.

Outlook

On an intraday basis, we expect oil prices to trade lower continuing its weakness from the previous trading session as trading volumes are expected to remain thin, today being the last trading day of the year. Besides, rising inventories in the US, slowdown in China’s energy consumption remains a cause of concern.

 

Base Metals

Base metals on the LME apart from Nickel traded higher yesterday as recent output cuts by China indicated that the biggest consumer is taking steps to curb further decline in metals prices.

Nickel prices declined as stocks remained near two year high levels. Also, stagnant stainless steel demand is weighing on prices.

On the MCX, all the base metal prices except Nickel traded higher in line with international trends.

Copper

LME Copper prices gained on Tuesday to close at $4735 per tonne, highest level in six weeks as nine refiners in China agreed to reduce sales of spot metal in the next quarter by a combined 200,000 metric tons. The move comes as prices have fallen below production costs and smelters want to support prices. This comes in addition to earlier decision wherein Copper suppliers including Jiangxi Copper and Tongling Nonferrous Metals Group have pledged to reduce output next year by 350,000 tons.

However, pending home sales, measuring contracts before they become final, slipped 0.9% in November from a month earlier to a reading of 106.9 restricted sharp gains. MCX copper prices jumped by 0.6 percent on Wednesday to close at Rs.318.4 per kg.

Outlook

We expect Copper prices to trade sideways today as global markets will be subdued ahead of New Year holiday. but recent output cuts will be supportive.

On the MCX, copper prices are expected to trade higher today in line with trend in the international markets.

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